How to restore functionality while drawing verticies?
The solution is to stop moving your mouse when you click.

In edit mode &#9096; Ctrl is a shortcut to extrude, the selected vertices will be extruded to the point you click.

Holding &#9096; Ctrl while dragging the  is the way to use lasso select. This is what gives you the grey area surrounded by dots.

Note that this is based on blenders default  RMB to select option, by changing that to  LMB you get the same result by using &#9096; Ctrl and  RMB